Loren Steffy says that has no effect. And as usual, he’s right. The current system of corporate governance effectively cuts the actual owners of a corporation out of any influence over who runs their corporation as well as all other decision.
Corporations are creatures of the law. They are statutory creations. If we as citizens of the United States as well as being citizens of individual states (that do the chartering of corporations) want to change the rules, we can. But there has to be some political will.
Let me lay out for you this utterly radical thought. I believe that –
THE PEOPLE WHO OWN THE CORPORATIONS SHOULD HAVE SAY IN HOW THEY ARE MANAGED.
What do you think? Does that make me a communist? I think I am a purer capitalist than many in the business world because I actually believe in private property in a way they can’t wrap their minds around. If you own part of a company, why should your wishes be ignored because of the way the law and the organization are structured?
Shareholders should be primary factors in determining who runs the company and how the company is managed.
Selections of the CEO and the Board of Directors should require shareholder ratification. Executive compensation packages should require ratification by the shareholders. Shareholder meetings should be conducted electronically on a regular basis far more often than the once a year mandated now.
It’s one thing to talk about free market capitalism and then not do it. That’s wretched hypocrisy. Let’s talk about it capitalism sincerely and act on our beliefs. To make capitalism a reality in the corporate board rooms of the United States we would have to make a connection between ownership and power. Why should CEO’s appointed without shareholder input and acting in opposition to shareholder wishes, be able to make their own policy, and choose their own boards. They are essentially acting as if the corporation was their personal plaything and not a duty to the real owners.
We can do better.
2 thoughts on “Should Shareholders Vote With Their Feet?”
THE EVOLUTION OF CAPITALISM
Capitalism was founded upon basic principles: production, supply and demand, and capital accumulation. It is a social theory whereby prices are determined by profit and loss, as well as market interest and fluctuations.
Although I understand the need for a free market enterprise, such a theory should not imply that we are willing to disregard our environment, or sacrifice the needs and comforts of our humanity in an attempt to realize higher profits (a.k.a., BP, Lehman Brothers, Goldman Sachs, etc).
Capitalism may be wonderful, but like anything else, it is still a flawed system. It’s a work in progress. It needs to be tweaked here and there in order to perfect its balance and to soothe the inordinate swings that occur day-to-day in our financial markets. If left unchecked, however, such a system will prove to be our economic downfall.
Well, for one thing, there is only so much profit a business can make from a product before it is left to cut costs in both quality and workmanship. In order to continually sustain a profit, businesses have to create those same products with lower quality ingredients and cheaper labor: which means that they must pull up stakes and move to other countries like China, Taiwan, or Mexico in order to survive. What does this eventually mean for people like you and me? It means that the very financial theory that promoted our country to super power status has turned on us. It means that the American workforce is now expected to work harder, longer, cheaper, and faster if we are to compete with the global economy now breathing down our necks.
Where do we go from here?
George Orwell had it right, to some extent, when he wrote his book1984. Many years from now, money will become worthless and the global populace will be employed and subject to hundreds (if not thousands) of individualized corporations that managed to survive attrition through merger aquisitions. It will be a feudalistic society: every corporation out for blood and vying for global dominance and absolute power. Our children and grandchildren will be there too: housed, clothed and fed by these various corporate entities; all the while being sent out on occasion, like brainless automatons, to errands of war, in an effort to absorb the weakest corporations into the fold. After all the dust settles, and everything is said and done, the remaining corporations will finally merge into a one-world government.
Science fiction, you say?
(…I’m left wondering.)
You are thoughtful person. I enjoyed your remarks. Please come back anytime. My perception is that you have a blog? If so, tell me about it and I’ll talk about it on mine. jp
Read James’ entries on Pilant’s Business Ethics Blog
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